Small scale exemption is not lost merely because a factory shifts premises temporarily when other conditions remain satisfied.

Mere shifting of a small-scale manufacturing unit to new premises, without any allegation of illicit removal or other independent disqualifying factor, does not by itself defeat entitlement to small scale industrial exemption under Notification No. 175/86-C.E. The unit had already been accepted as a small scale unit by the Department and the Directorate of Industries before the shift, and it moved back to the earlier premises shortly thereafter. Because the demand concerned only the interim shifting period and the other exemption conditions were not shown to be breached, the exemption remained available and the demand was unsustainable.

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Issues: Whether the assessee was entitled to small scale industrial exemption under Notification No. 175/86-C.E. for the period when its unit had shifted to new premises not reflected in the registration certificate.

Analysis: The unit had been accepted as a small scale unit by the Department and the Directorate of Industries before the shift, and it was not disputed that it shifted back to the old premises shortly thereafter. The demand related only to the interim period of shifting. The record showed no allegation of illicit removal or any independent ground to deny exemption. Mere shifting of the factory to a different location, by itself, does not disentitle an assessee from the benefit of small scale exemption if the other conditions are satisfied.

Conclusion: The assessee remained eligible for the small scale exemption and the demand was not sustainable.

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